The AE2S North Central Utility Rate Survey provides an annual overview of the cost of residential water use throughout the region consisting of Minnesota, Montana, North Dakota, South Dakota, and Wyoming. For comparison, the survey is based on the assumption that 6,000 gallons per month represents “average” water use.
Some systems have noted an increased emphasis on water conservation in recent years, reflected both in rate-setting practices and other strategies unrelated to pricing, such as appliance rebates. To get an idea of the magnitude of the range of pricing strategies devised to incent reduced water use, the cost was calculated for an additional 14,000 gallons of water for a total monthly bill equating to 20,000 gallons of water use based on water rate structure information provided in the 2013 survey. Data was used from a total of 55 systems that reported a conservation water rate structure. Of these, 34 systems serve more than 5,000 people, and 21 systems serve fewer than 5,000 people. A comparison of the cost for 6,000 gallons versus 20,000 gallons of water was provided in the November/December issue of The Source for metro systems. (Metro systems are provided wastewater service by the Metropolitan Council in the Minneapolis/St. Paul area).
Figure 1 presents the comparison between a bill for 6,000 gallons and one for 20,000 gallons for non-metro systems serving greater than 5,000 people. Figure 2 illustrates the same comparison for non-metro systems serving less than 5,000 people. It should be noted that the green bars representing the charge for 6,000 gallons include any fixed charges assessed each month regardless of water use. The purple bars represent only the volumetric charge of the additional 14,000 gallons of water.
Figure 1: 2013 Monthly Residential Water Utility Bill for 6,000 and 20,000 Gallons – Non-Metro Respondents Serving Greater than 5,000
Figure 2: 2013 Monthly Residential Water Utility Bill for 6,000 and 20,000 Gallons – Non-Metro Respondents Serving Less than 5,000
Figures 1 and 2, illustrate the variation in the degree to which systems increase the water charge as water use increases. In general, for systems serving 5,000 or more people it was found that the average volumetric charge (excluding average fixed charges) for the first 6,000 gallons was $2.75 per thousand gallons, and the rate per thousand gallons for the next 14,000 gallons averaged at $3.37 – a 23 percent increase. For systems serving less than 5,000 people, the average volumetric charge (excluding average fixed charges) for the first 6,000 gallons was $2.48 per thousand gallons, with the cost for the next 14,000 gallons increasing at a higher rate of 38 percent to an average cost per thousand gallons of $3.42.
Responses to the 2013 AE2S North Central Utility Rate Survey indicate that approximately 40 percent of all respondents currently utilize a conservation water rate structure. Looking back to 2009, it was reported that only 18 percent of all respondents utilized a conservation structure. This increase reflects efforts within the State of Minnesota by the legislature to advocate for water conservation, as well as efforts by many other systems in other states as utility managers and decision makers face challenges associated with water supply, aging infrastructure, funding program requirements, and increasing water demands in some areas. The approach for each utility to implementing conservation price incentives, as illustrated by the variation in Figures 1 and 2, is specific to objectives of the system, and is not “one size fits all.” For more information on statistics from the 2013 rate survey, contact Miranda Kleven at Miranda.Kleven@ae2s.com.